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Insurance costs fall but interest rates and inflation push motoring costs up 7% E-mail
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Wednesday, 08 August 2007
The cost of running a family car has risen by 7 per cent in the last 12 months, according to the AA's annual survey of motoring costs. It now costs €11,710 to run a small family car with an engine size of 1251 - 1500cc for a year; up by €806 on the figure for 2006.

However, interest rates have risen by 1.25% in the last year as well, and this is one of the hidden costs of motoring as the AA's calculations include the cost of loss of interest on capital when you buy a car. The purchase price of new cars has not increased significantly in the last year. However the AA's analysis of the cost of items such as servicing, spare parts and parking show an average increase in those costs of approximately 5%, which is in line with overall inflation for the last 12 months.

"Fuel costs are still a major problem, but rather surprisingly they do not show up in our survey," said Conor Faughnan of AA Ireland. "This is because we had a surge in fuel prices this time last year; they dipped significantly late in 2006 but rose again are now just slightly up on June of last year."

AA Ireland reported that insurance premia have fallen for the fourth successive year. In the last 12 months, the average premium is down by 9 per cent, according to AA Ireland.

AA calculates the total cost of motoring for different categories of car based on an annual mileage of 10,000, or 16,000 kilometres. Included are all motoring related costs, from depreciation to interest on capital to servicing and petrol. The figures are then broken down into 'cost per kilometre' and form the basis for mileage allowances paid by many companies to their employees.

The cost per kilometre for a small car (1251 - 1500cc) works out at 73.19 cent, up from 68.150 cent last year.

 


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